State moves to shut down Internet cafes

March 14, 2013|By Nick Sortal and Kathleen Haughney, Staff writers

TALLAHASSEE – Lawmakers are scrambling to ban Internet cafes across Florida in the wake of a state and federal probe into an Internet gambling company that had become a major political contributor in Florida.

"These machines and these Internet cafes need to be closed down," said House Speaker Will Weatherford, R-Wesley Chapel. "We believe that they're acting illegally."

The news of the Allied Veterans investigation, coupled with the resignation of Lt. Gov. Jennifer Carroll, who previously served as a consultant for the company, has spurred lawmakers to fast-track legislation to shutter the roughly 1,000 Internet cafes across the state.

The House Gaming Committee will meet Friday to debate a ban, and Weatherford said the full House likely will vote on it next week. The Senate Gaming Committee will meet next week to consider similar legislation.

But the House will move even further to shut down what are known as adult game rooms and other slot machines popular in Miami-Dade County corner stores, said House sponsor Carlos Trujillo, R-Miami. The Senate is still working on how to address those issues, a spokeswoman said.

"I think the climate is right," Trujillo said.

And he'll have plenty of support from the rest of the gambling industry.

South Florida pari-mutuel owners and others have long been pleading for a ban on Internet cafes, commonly located in strip malls and which sell "Internet time" to players who call up games that resemble slot machines or video poker. Allied Veterans ran 49 of them and this week was called a $300 million criminal enterprise.

"Internet cafes are dead men walking," said Marc Dunbar, a lobbyist for Gulfstream Park. "That's very apparent. It's unfortunate it took the resignation of a lieutenant governor to get us here. I mean, I've been asking these guys to do it for years."

The state has estimated that $1 billion in Internet cafe proceeds have gone untaxed. The same sum played on the Florida Lottery would have resulted in $350 million more for Florida education.

Lawmakers last year couldn't agree on whether to ban the cafes or regulate them, and as a result they did neither. Reflecting the dollars that were at stake, Allied and related entities over the past four years gave at least $1.3 million in contributions to dozens of legislators and political committees controlled by them, as well as more than $500,000 to the state's two major political parties.

Representatives of the Internet cafe industry could not be reached Thursday. All lobbyists representing Allied's parent group stopped representing them as of Wednesday. A public relations firm representing a coalition of Internet cafes, led by Allied, also dropped them as a client.

Dan Adkins, president of Mardi Gras Casino in Hallandale Beach, said the charges against Allied equated to "organized crime."

"On the operational side [of all the businesses], the biggest problem is not only are they not regulated by anyone nor are they taxed — so there are no state benefits — but because of no regulation, who's protecting the customer?" he said. "You might put in a $20 and find out you're operating on a 20 percent payout."

The Internet cafe ban may be a sweeping change for many municipalities around the state, but in South Florida, closures of the adult game rooms, essentially adult arcades, would be a far bigger deal.

Officials in Tallahassee say both Internet cafes and game rooms are exploiting different parts of the law though as a way to offer more gambling.

Internet cafes operate under the legal gray area of a sweepstakes, with into a computer that instantaneously displays winners and losers. The games are formatted to look like everyday slot machines. Game rooms are classified as low-stakes "games of skill" and are legal under the state's "Chuck E. Cheese" law, which allows prizes to be paid to players who hit a "stop" button at the right time.

"We're totally different," said Valerie Harrison, co-owner of Casablanca Game Room in Lauderhill. She said the state tried to eliminate game rooms a few years ago, but seniors stormed Tallahassee with complaints.

Miami-Dade County, with its large Hispanic population, is also home to "maquinitas," or "cherry masters," slot machines that award credits instead of cash. They're often found in gas stations and convenience stores.

Isadore Havenick, Magic City Casino's vice president of political affairs, said he has seen some of the casino's regular visitors playing them.

"There's no difference between them and the slots," he said, adding that he knows of only two Internet cafes in Miami-Dade County.

Dunbar has been working with legislative staff to put bans on the adult game rooma dn machinatas in the House and Senate proposals without hurting legitimate family businesses such as Dave and Buster's and Chuck E. Cheese.